U.S. Supreme Court
Railroad Company v. Maryland, 88 U.S. 21 Wall. 456 456 (1874)
Railroad Company v. Maryland
88 U.S. (21 Wall.) 456
1. A stipulation in the charter of a railroad company that the company shall pay to the state a bonus or a portion of its earnings is not repugnant to the Constitution of the United States.
2. Such a stipulation is different in principle from the imposition of a tax on the movement or transportation of goods or persons from one state to another. The latter is an interference with and a regulation of commerce between the states, and beyond the power of the state to impose; the former is not.
3. The power of a state to construct railroads and other highways and to impose tolls, fare, or freight for transportation thereon is unlimited and uncontrolled. The disposition of the revenues thus derived is subject to its own discretion. But a state cannot impose a tax on the movement of persons or property from one state to another.
5. Relief from onerous and burdensome rates of transportation imposed under state authority must be sought in the competition of different lines and perhaps in the power of Congress to establish post roads and facilitate military and commercial intercourse between the different parts of the country.
6. The charter of the Baltimore & Ohio Railroad Company for constructing and working a branch railroad between Baltimore and Washington contained a stipulation that the company at the end of every six months should pay to the state one-fifth of the whole amount received for the transportation of passengers. This charter was accepted and complied with for many years. Held:
1st. That this stipulation was not repugnant to the Constitution of the United States.
2d. T hat it was a contract to pay, and not a receipt of money belonging to the state, and, if unconstitutional, the objection could be set up as a defense to an action brought by the state to recover the money.
3d. That as the alleged unconstitutionality of the stipulation was set up as a defense, the state court was bound to pass upon it, and having decided against the exemption thus claimed, this Court is authorized to review the decision.
A statute of Maryland granted to the Baltimore & Ohio Railroad Company the right to make a branch or lateral road from Baltimore to Washington City and of employing machinery and carriages thereon for the transportation of freight and passengers. [Footnote 1] And it was further enacted,
"That the company shall be entitled to charge and take for conveying each person, the whole distance between the Cities of Baltimore and Washington, not exceeding two dollars and fifty cents, and in proportion for every shorter distance."
"That the said company shall pay to the treasurer of the Western Shore of Maryland, on the first Monday in January and July in each and every year, for the use of the state, one-fifth of the whole amount which may be received for the transportation of passengers on said railroad by said company during the six months last preceding. "
There were other statutes on the main subject, but this one presents the substance of the enactments.
This enactment was accepted, and the payment made for many years of one-fifth of $1.50, the fare asked. However, after a certain time, the railroad company denied the constitutionality of the stipulation to pay, and refused further payment. Hereupon the state sued the company in one of the state courts of Baltimore.
The action was indebitatus assumpsit. The declaration contained two counts: the first for money due and payable, the second for money had and received. In answer to a demand of the defendant for a bill of particulars, the following was filed by the state.
"The claim is for the particulars following, viz.: for $500,000, being the one-fifth part of the whole amount of moneys received by the defendant for the transportation of passengers upon the Washington branch of the Baltimore & Ohio Railroad, from the 1st day of January, 1860, to the 1st day of January, 1870; which said sum of $500,000 was received by the defendant for the use of the plaintiff, and was due and in arrears to the plaintiff at the time of the institution of this action."
The defendant pleaded the general issue, and on that issue the case was tried.
The record showed that at the trial of the cause, after all the acts of assembly constituting the charter referred to, and bearing on the question, had been submitted, the defendant, by his counsel, prayed the court to instruct the jury that these acts, so far as they provided that the defendant should pay to the treasurer of the Western Shore of Maryland, on the first Monday of January and July in each and every year, for the use of the state, one-fifth of the whole amount that may be received for the transportation of passengers on the branch road mentioned in said acts during the six months last preceding, were unconstitutional, because in conflict with the Constitution of the United States, and secondly, that the defendant was not estopped from setting up the defense.
The plaintiff, on the other hand, prayed the court to instruct chanrobles.com-red
the jury that even if the said provision was unconstitutional, still the defendant, by accepting the terms of the charter, was bound to pay to the state the one-fifth part of the passage money in question.
The court granted the prayer of the defendant and refused that of the plaintiff, and a verdict and judgment were rendered for the former.
The Court of Appeals of Maryland reversed the judgment and awarded a venire de novo.
Upon the second trial, the same instructions were asked by each party respectively, and the court below, in conformity with the decision of the Court of Appeals, refused the instruction asked for by the defendant and granted that asked for by the plaintiff, and a verdict and judgment were rendered for the latter. This judgment was affirmed by the Court of Appeals, and was now brought here under the assumption that it was within section 709 of the Revised Statutes, the old twenty-fifth section of the Judiciary Act. chanrobles.com-red